How to Escape Living Paycheck to Paycheck
When your money comes in and then immediately goes out, you might be feeling powerless! Taking control of your finances is a simple, but not always an easy process. If you’re experiencing this stress in your current financial situation, here are some tips on how to escape living paycheck to paycheck.
Of course, everyone’s situation is very different. But even a few small changes to how you manage your money can go a long way. The first thing you should do is insert a buffer.
Make a Buffer
To break the constant cycle of money coming into your account and then going right back out, you need to create a buffer. Buffers don’t have to be complicated. They can be as simple as moving $10 a month into a high yield savings account. The goal is to break the money that’s coming in into assets that make you MORE money.
To help you be consistent in contributing to your buffer each paycheck, you can automatically send money to your assets. This will help you stick to your commitment of becoming more financially in control. Eventually, you won’t even miss the few dollars you’ve been moving to your buffer because it will have grown!
As you plan for next month, think about any small changes you can make with your money so that you can slowly get yourself out of living paycheck to paycheck.
The ideal situation
While you’re growing your financial situation, your priorities and goals might change. The ideal place to get to with your money is to have any of the money you actually spend come from your assets. That means your paycheck will go into your assets and those assets will be what you use to cover your monthly expenses.
Don’t be intimidated to start small! The most important thing to keep in mind with compounding your money is that you start now, not how much you start with. Even moving $10 a month into another account or asset will compound and grow faster than you might realize.
Embrace a growth mindset
One of the best things you can do for your financial health is to accept a growth mindset. Make sure you understand that becoming more financially free doesn’t happen overnight. What does matter is that you even start! Even a small investment today is better than a large investment tomorrow.
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